Tuesday, November 15, 2011

Price Discrimination, or Discrimination?

In class recently we discussed the different types of price discrimination.  As I was driving home from work yesterday, I found myself at the cafe buying a cup of coffee.  Next to the cafe was a barber shop, catering to cutting men's hair.  Nearby the barber shop was a salon, catering to cutting women's hair.  The salon was much more expensive for a haircut.  I'm not talking about shampoo, or curls, or anything else.  The haircut at the barber shop was $10, at the salon it was $15.  I started thinking about this in economic terms, because I am a nerd.

Some internet trolling led me to this article, which discusses the differences in price that genders pay for products.  My question to you is this:  are these examples of price discrimination, or are they examples of "real discrimination"?

Consider the following below:

  • Why do you think that there is a price difference between the salon and the barber shop?
  • Are some of the products mentioned in the article examples of price discrimination, or are they examples of old-fashioned gender discrimination?
  • Is price discrimination bad?  Should it be somehow outlawed or curtailed?
  • The author seems to suggest that this price discrimination is not just a harmless case of charging women more for shampoo; subprime mortgages and other large purchases seem to fall into this category.  Is this an example of price discrimination, gender discrimination, or is there perhaps a perfectly "legal" reason that more women have worse mortgage rates or higher premiums?
The first blog post on this topic is due by Saturday, November 19th at midnight.  The second post will be due on Sunday, November 27th at midnight.

22 comments:

Christopher Blair said...

There is a price difference between the salon and barber shop for very obvious reasons. Women’s' hair, because it is typical longer and more elaborately treated than men’s' hair, simply requires more time to cut and care for at the salon. Time is money; so naturally, the longer haircuts given in the salon will cost more. Some of the products mentioned in the article, especially the beauty products, are examples of price discrimination. The only reason these prices cost more for women is because the manufacturing companies are attempting to use first degree discrimination. However, the difference between mortgage rates and wages between men and women is the result of old-fashioned gender discrimination. Charging women higher rates for health insurance, though it may be morally reprehensible, is perfectly legal and makes sense from a business perspective. Women generally receive more annual screening than men (mammograms, etc) and go through childbirth, all of which their insurance covers. Price discrimination is not bad from a business perspective, but to the extent that it begins widening sociocultural gaps (gender, race, etc) it should be curtailed or limited.

Catherine Butt said...

There are many factors that may lead to men having lower prices for a haircut. For one, men tend to get their hair cut more often, preferring their hair shorter. Plus, it is a lot easier to cut men hair with a razor rather than women hair with scissors. Women also tend to be pickier. There are generally more styles for women to choose from. The environment or general upkeep of the salon may cost more to provide. Women like to be relaxed when they get their hair done. Men usually just want to get it over with.

The only example that sticks out to me as price discrimination is the one regarding products from Clinique. The prices are different because men are not willing to spend more money for moisturizer. The other examples such as the razors just seem to have higher costs for production. I do not believe these prices to be gender discrimination.

Price discrimination is good for producers, but can sometimes be seen as bad by consumers. Companies tend to generalize what certain types of consumers are willing to pay. I am sure there is a reason why price discrimination is not outlawed already. As much as individual consumers may look at their given price as unfair, these price differentiations may be beneficial to the overall economy.

The mortgage example is not strong. More research should be done on this subject. I do not believe it to be price discrimination or gender discrimination. Women may simply have worse mortgage rates because they enjoy spending more money than they have.

Olivia N. said...

A major reason for the price difference between the salon and the barber shop is that women care a lot more about appearance and need to have the perfect look, so they are willing to pay more. Also, there are many types of women’s hairstyles, so an employee at the salon would need a broader range of expertise than a men’s hairstylist, jacking up the price.
I believe the products mentioned in the article are examples of price discrimination. Women feel great using hot pink shaving cream and special women’s razors, so they are willing to pay more. Producers sell what the market will carry, so as a result women’s products are more expensive. Really we do it to ourselves by consistently buying the women’s products.
Price discrimination on the little things like shampoo and vitamins isn’t necessarily bad because women choose to buy these things even though the men’s or generic version is exactly the same. An easy way to eliminate or reduce the high prices for women would be to boycott these goods. In the case of goods that are not necessities (as in, women could buy another version), price discrimination does not need to be outlawed.
The differences in prices on a large scale (mortgages, health insurance) is a different case; I see this as gender discrimination. Perhaps mortgage brokers prey on naïve women to charge them higher rates, but there must be a better explanation. There is no practical reason for a woman’s mortgage to be higher than a man’s. In this case, the price of goods should be constant between genders, and the price should be regulated.

Grace said...

I could see why a haircut for a girl could cost more if they have long hair, layers, or particularly difficult hair to cut. It takes me about forty five minutes to get a hair cut and when I asked my dad how long it took him, the answer was a half hour. I also think that by the haircut being in a "salon" instead of just a barber shop, part of the price increase comes with the more upscale nature of a salon.

I definitely believe that some of the examples of products mentioned in the article are examples of price discrimination, particularly blocked by gender which is 2nd degree. By knowing that women are willing to pay more for a product, the companies are smart enough to charge the women more.

I don't think the price discrimination Is necessarily bad in every case as annoying as it may sound to us in the article. We may not like the fact that companies charge different people different prices but especially in this economy the companies are doing what they can to make money.

Price discrimination on products such as hair care or shaving cream is just companies trying to make money but for things like insurance or mortgage rates is wrong. That should be outlawed. Why does being a girl mean a house should cost me more??

I do not think that there is a legal reason for this discrimination whether it is simply price or more wrong, gender discrimination. Just because I am going to have kids doesn't mean I will have more health problems. Doesn't having kids lower the risks for things like breast cancer for women. That type of price discrimination is wrong.

Rachel Schwaab said...

There are many reasons for the differences between haircuts for men and haircuts for women. Women have longer hair and require the hairdresser to spend more time styling it. Men have shorter hair and are less demanding when it comes to style. Because styling takes time, salons charge more for women's haircuts. In the time they could the hair of 5 men, they could probably only style 2 women.

Many of the examples used in the article are first degree price discrimination. The "eye reviver" for men is put on the market for a lower price because men are not willing to pay the $15 that women are willing to pay for the cream. This decision to implement first degree price discrimination is derived from old-fashioned gender roles. Since women stereotypically care more about looks and hygiene, companies decide to charge them more for beauty and hygiene products.

Price discrimination on beauty products does hurt women, but I do not think it is bad. There are other products that cost more for men. Basketball shoes, for example, cost more for men. Women care less about the style and brand of their shoes than men.

There are "legal" reasons for women to have higher premiums; however, I do not think it is moral for women to be forced to pay higher mortgage rates. Women do go to the doctor more often. They have to go through more expensive care as well. Women go through childbirth, which can be long and expensive. his is not price discrimination or discrimination at all. The mortgage example is discrimination.

Ryan Blum said...

Price discrimination could be a reason why barber shops are more expensive. Women are probably willing to pay more for their haircut. But, also because women's hair takes more time. At this one barber shop I go to, it takes the barber 5 minutes, it costs twelve bucks, it looks like crap, but i don't say anything because i just want to get out of there. I can't speak for the average women, but I don't that would go over well for them. But, it is still price discrimination. The purpose of the different prices is to make more money, not discriminate against women, especially because the salons are run by women! I think first degree price discrimination should be outlawed (like it already is). You have to give the business a chance to make money in this bad economy, but you also have to give the consumers a chance to get a good deal in competition, and first degree price discrimination for the most part doesn't follow that. I think that large purchase price discrimination occurs for a variety of reasons. For cars, women aren't as aggressive with negotiating as men are. Men are naturally cheap (myself included) and know how to threaten to go to another dealership if they don't get the price they want. Women have the capability to do that, but for the most part in general they tend not to. But, with health care, the reasons are mainly because women's health care costs more because of screenings and child birth. Now whether men should share this extra cost and stay even the women is up to Congress or the insurance companies themselves.

Aakash Patel said...

The reason for a price difference between men and women at the salon and barber shop is obvious. Women usually have longer hair that takes much longer to cut and take care of. Men's hair is usually short while and very easy to cut so much less time is taken. The price discrimination in hair and beauty products is only due to the fact that men are willing to spend much less then women. One example of old fashioned discrimination in the article is the difference in wages for men and women. Women are also charged more for health insurance because they simply go to the doctors more often then men and it makes sense to charge them more. I personally don't think price discrimination is a bad thing for a business, but when I end up paying more for something i wont be happy.

Flojenga said...

It costs more to get a haircut at the barber shop because men usually do not care about their hair as much as women do and are not willing to pay higher prices that women are more willing to pay.

I think the examples in the article are all price discrimination because like I said earlier, women are more concerned with those things and are therefore more willing to pay a higher price for them.

Price discrimination is only bad if you're the one who has to pay a higher price for something.

I'm not sure if there should be any regulations put on price discrimination, because it's not like the companies could just price their products ridiculously high, otherwise no one would be able to afford it and they wouldn't make any money.

The fact that women are charged more for mortgages and such seems more like it would be just straight-up gender discrimination, but the insurance differences make sense because women around child-bearing age could obviously have a child and their health insurance would go up. It's the same as charging teen drivers a higher insurance rate because they are more accident-prone.

A. Clark said...

I see this situation as price discrimination. As a guy, I could care less about my hair. If there was a barber shop that cost 15$ to a another's 10$, you'll find my mop head getting beautified for a sweet deis pesos every time.
Genders place varying value on different goods; it just so happens women get hit hard with higher prices for hygienic products because beauty companies know women will take the extra effort to "improve" their appearance.
Price discrimination is bad mojo for the consumer, but fantastically profitable for the seller. There should be regulation that protects the privacy and financial details of consumers by the government.
Without seeming calloused or insensitive to the plight of my female counterparts, I hesitate to say that I simply see this as a case of price discrimination. Women will most likely look for health insurance that will provide them with the best care possible because they will eventually need to use those services. Take a healthy guy and an equally healthy woman, and its my expert opinion that a woman will end up going to the hospital more often than the man because she has things like pregnancy and other lady appointments that men can skip out on.

Nala Jackson said...

I believe there is a difference in price because women have more things done to their hair when they giro the salon. It is easy to just cut a man's hair but women get their hair permed, straightened, and many more. I believe these are examples of price discrimination because men are usually not willing to spend much money on products. Women, on the other hand are careful about the products they chose and are more willing to spend more money on a product if they know it will work. I don't think price discrimination is bad because it allows producers to make more money on their products. However, saying that your product has different technologies is just plain bologna. The strategy is women go through products faster so they charge them more to make more money. The last example ( mortgage ect. ) us circumstantial. They charge more because women will have children and they can get more money Out of them. This example of price discrimination is just simply not fair.

Doug Alderson said...

I think the reason for the price difference between the barber shop and salon is that men tend to get their hair cut less often. As for the examples presented in the articles, I think all of the care products are examples of price discrimination while the differences in pay in gender discrimination. I think that price discrimination shouldn't be allowed if the only difference between the men and women versions is the box or something like that.

Rishi Raval said...

There is probably a price difference between the barber shop and salon because, although they offer very similar services, to cut women's hair it most likely takes longer and they are more invested in how their hair looks then most men. I would say that the difference in pricing in the products mentioned in the article is probably a bit of both price and gender discrimination. Many women are more willing to pay for the beauty products then men are so they charge them more, but in some cases it may simply cost more to make and as consumers we may not understand the production aspects of it. Offering women less wages is obviously gender discrimination and so is the case of dress and tuxedo alterations. For women price discrimination is obviously bad(at least in these examples but I am sure that men are price discriminated against as well) but I don't necessarily believe that it should be outlawed. It is not always a bad thing because although some products are more expensive because of it, there are also other products that are lowered in price to match what you are willing to pay (the Kindle example in class) but it should be monitored so it doesn't get out of hand.

James Granderson said...

After reading the article, it appears that the products are examples of both price discrimination and gender discrimination. Just the fact that there is a male and female version of a product is making a rather blunt statement of gender discrimination. In reality, razors could just be sold as "Razors" and not as "Men's Razors" or "Women's Razors." There is nothing different about one or the other, as they complete the same task of cutting facial/body hair.
The division created through such products makes some people think that there is some huge difference between men and women, and that if one is a man, he must buy only male products, and if one is a woman, she must buy only female products, no matter what the cost. In reality these products are almost always the same. This ignorant concept makes it possible for companies to charge more for products based on gender; in this case for women.
Women can stop this price discrimination based on gender by simply boycotting those products that cost so much more for them. It may be wrong to charge more for women, but the reason companies are able to continue doing so is because many women continue to buy these gender specific products. Of course there are some products that only exist for women because of the female anatomy, but for everyday grooming there is no need to pay so much more. The same can be said for clothing. There are many ways a woman can keep her wardrobe cheap yet stylish. Thrift stores are a great option; just find some clothes that are in good condition and wash them. Another option is also to not buy or spend money on things that are so meaningless, and this goes for men and women.
People should take into consideration some of the things that are more important in life. I always hear people talking about what they are out to buy next, when really this whole desiring and buying brings no real satisfaction in the end, because once the object is bought and loses its novelty, that object is now meaningless and a new desire arises. This whole cycle exists because people aren't ever satisfied with what they have. A common beggar in the streets could potentially be the happiest person in the world if he or she is content with his or her lot in life. A rich person who is always striving to earn more or buy more, constantly subject to the vice of greed, will almost always be corrupted and unhappy because of the hell that is is created from constant dissatisfaction.
As for women, I believe that certain things like salary, job opportunities, and pricing should be made completely equal; no exceptions. While that fight is being fought, women need to realize that they do not need to cater to the image of a woman that society has created. I cannot possibly number all of the commercials I have seen that cater to this idea that in order for a woman to be beautiful or perfect she must buy all of these skin creams, hair products, special diets, body slimming/enhancing clothing, or makeup. By virtue of being a human being any woman is perfect, because each woman is perfectly themselves. No one individual is exactly like another one, and that is what makes everyone beautiful. I do not necessarily mean aesthetically beautiful, but beautiful in individuality, or in pure being, whatever you want to call it. There is no need for a woman to go through all of this trouble thinking they need to appear "perfect" for everyone out there. The very nature of the body is that it eventually grows old, dies, and fades away. It is not wise to become too attached to some false notion that it needs to be constantly flawless, as if a panel of judges were watching every move. Of course the body is a gift, and should be taken care of through exercise, good hygiene, and proper diet. As for all of those BS products? It is best to just trash those, because they are not what makes a person truly beautiful. That is all I have to say about that!

ANNANA said...

There you go, Mr. Long, picking another article that makes me angrier than I should be on a typical Saturday night. It’s interesting, however, to read about how backwards this country still is when it comes to gender discrimination, no matter how egalitarian we claim to be. And there’s surprisingly less outrage among these blog posts than there should be...

The price difference between the salon and the barbershop might have been justified if it were referencing two different services. If the salon was offering a cut and style for the women while the barbershop only offered a trim for the men, I could understand the $5 difference. But the two businesses are offering virtually the same service to both sets of customers, therefore the price discrimination becomes unnecessary and morally ambiguous. I can see the motivation behind this business move, however, given that many women often are willing to pay a higher price for their routine hair appointments (note that I said “many”, not “most” or “all”). On the other hand, I’m sure there are millions of ladies who would give up their firstborn child to pay just ten bucks for a haircut, but since they’re never offered an option, it hardly matters what they want, right? Wrong.

Speaking of moral ambiguity, the rest of the article only serves to extinguish any hope I had left in this male-dominated society we live in. Really, America? Did the 1960s teach you nothing about gender equality?! How do corporations get off with charging us poor, helplessly naive females higher prices for products we don’t need? Not only are we paid just 78¢ to a man’s dollar, we’re also expected to pay more for virtually every item we buy, provided that it caters to our expressly female preferences (meaning it has a pink box and fancy lettering). Makes perfect sense.

But no, price discrimination is not a bad thing. It’s actually a great idea if you happen to be a [misogynistic] corporation trying to maximize your dirty profit. And most of the time, when it avoids stepping on the toes of contentious social issues, such as gender discrimination, it can work out quite nicely. But overall, there’s just something suspicious about companies being able to charge different prices to different consumers, as if we’re all just pawns in a sadistic little game. So yeah, it should be regulated at least.

And come on, there is absolutely no logical reason for women to have worse mortgage rates or higher premiums. In what universe does that make sense? That’s just plain old gender discrimination, though clearly, that means nothing nowadays.

Tyler Farrell said...

There is a price difference because generally women care more about their hair then men and are willing to pay more to get their desired style. Plus, women have more hair then men, and it takes longer to cut.

The products are price discriminated as for that reason, because the products for women cost more because women are willing to do more to improve their appearance than men.

Price discrimination is not fair. Just because someone is rich does not mean they should have to pay more. It is like giving a free pass to poor people by saying they don't have to pay full price because they're poor. everyone has equal opportunity to make money if they try hard enough, and should pay the same prices.

I don't think there is a justification for the mortgage, but i do think that charging higher premiums for women is perfectly reasonable. Men do not have to go through labor which can cause more health problems.

p.s. sorry its so late..

kjackson said...

A salon and a barbershop are reaching out to completely different consumers. Typically, when you ask a man what kind of haircut he's going to get, he'll say he's just getting a trim. Women, o the other hand, tend to focus more of their attention on their hair, and provide a long list of demands for their "stylist." A demand curve for men's haircuts its fairly elastic when compared to women's much more inelastic demand. With these differing consumer bases, the salon and barber shop offer different prices.

From reading this article, it's clear that many household products are examples of second degree price discrimination. Companies sell their products at different prices for two different groups: men and women. To get higher profits, companies offer varying prices to certain groups of people in order reach out to as many buyers as possible. With the targeted groups being based on gender, these are also examples of gender discrimination. More Heinously, differing mortgage rates are plain un-ethical. Men and women both have equal need for homes, so the product, shelter, shouldn't be price discriminated based on gender or even at all.

Jimmy Warshaw said...

There is a difference between the barber and the salon because their target markets are different: the people who go to a salon are more willing to pay higher amounts of money than the people who go to a barber. Some of the products mentioned in the article are examples of price discrimination, because the companies who make the products are attempting to price them to two different markets, men and women. Price discrimination is good with respect to businesses, but bad with respect to society in general.

Donny Wiggins said...

A lot of men, like me, have a very small interest in their hair. I just wash it in the morning, dry it, and go to school - no brushing required. A lot of women, however, can spend up to and/or over an hour everyday simply working on their hair. Since women's hair clearly requires more time and effort to prepare than men's hair, the cost of having it done is much higher than that of men's. The higher prices on hair products are a result of first-degree price discrimination. Companies know that women are going to willing to pay much more for products than men. On the contrary, higher mortgage/health insurance rates are clearly gender discrimination. The price discrimination on the hair products is totally fine to do; it's just a smart business decision, but gender-discrimination should have no part in any market whatsoever.

Colin D said...

The salon generally caters to more women than men. This being said womans hair is usually more important to them than that of a guy. They are willing to spend more to make sure they get it done right. The products mentioned in the article are more related price discrimination. They are selling the products to the whole group of women at a higher price. Price discrimination is not bad it shouldn't be obsessive though. In the examples in the article two dollars more was not too high. The higher mortgage rates and worse mortgages are an example of gender discrimination. Both men and women have mortgages , but what is the difference between a man's mortgage and women's?

eric medinger said...

I believe that men are not willing to pay as much for their haircut because they want their haircut but do not care as much about their hair as women do. I feel they are gender discrimation because women always get paid more but can be justified as price discrimation because they are different products. What they are doing is not illegal so I dont believe it should be outlawed. Price discrimation is bad because it is unfair to people who have more money and have to pay more because of it. I feel like it should be curtailed but that it will never happen. I dont believe there is a reason why women have to pay more for then men for mortgage so it is an example of price discrimination.

eric medinger said...

I believe that men are not willing to pay as much for their haircut because they want their haircut but do not care as much about their hair as women do. I feel they are gender discrimation because women always get paid more but can be justified as price discrimation because they are different products. What they are doing is not illegal so I dont believe it should be outlawed. Price discrimation is bad because it is unfair to people who have more money and have to pay more because of it. I feel like it should be curtailed but that it will never happen. I dont believe there is a reason why women have to pay more for then men for mortgage so it is an example of price discrimination.

Alyssa Judson said...

Okay, since you (Mr. Long) were very generous in letting me do this, I am making another post, though I pretty much answered everything the last time. Thus, I am using this time to (hopefully) convey my ideas with more clarity.

Why do you think that there is a price difference between the salon and the barber shop?
Conveniently, I just had a conversation with my ex-boyfriend (who is, yes, a hairstylist) about the differences between the two shops. He defended the higher prices of the salon, saying that they use more expense products and their employees spend more time of each cut/do. Since he has experience at both, I trust his statement. But also, it's fair to say that girls care more and are likewise willing to pay more. I certainly value a good cut more than, say, my brother does. If that's gnder discrimination, then I'm discriminating against myself.

In reality, salons are doing the practical thing- charging more for what costs them more. Plus, think about all the consumer surplus they could be looking at if they charged the same as barbershops! And since we're dicussing this using economics, we MUST consider the implicit costs (missed consumer surplus) that could occur if everyone was charged the same.

That all being said, I was only applying economic principle to rather petty expense. If we're talking insurance and mortgages, that's all whole 'nother story. Charging different rates of insurance based on gender is apparently economically efficient. But like Mr. Long said, it is morally bankrupt. The most difficult aspect. though, is the excuses that firms will hide behind to justify higher prices. Like-women get more screenings, so we should charge them more! Well, that's ridiculous; men are more likely to get heart disease, one of the number one causes of death. And either gender seems equally susceptible to cancers, so please, let's downplay the cost of screenings. I definitely think THIS is a case of discrimination, though the firms probably are crazed misogynists. They are however, able to see that women, generally, are more cautious and likely to pay higher premiums. This should absolutely be outlawed; this isn't a matter of weave or braids, but a matter of life or death